In brief
- Canada’s draft stablecoin regulations, published October 24, open a 60-day comment period, with the rules targeted to take effect in fall 2027.
- Issuers would hold one-to-one reserves with Canadian custodians, redeem within three business days for no more than a 1% fee, and could not pay interest for holding a coin.
- Penalties run up to C$10 million for very serious violations, with the Bank of Canada supervising issuers.
Canada proposed rules on Saturday that would force companies issuing stablecoins—crypto tokens designed to hold a steady value, usually one U.S. dollar—to keep real money behind every coin and hand it back on request. The draft, published in the Canada Gazette, the government’s official newspaper, also keeps a ban on paying holders interest, otherwise known as yield.
For anyone who holds these tokens or might send money abroad with them, the rules decide whether you get real cash back if the company behind the coin collapses, how fast it arrives and what it costs.
Every coin must be backed one-to-one by reserves limited to cash and government debt maturing in three months or less, along with money market funds (pools of short-term safe assets) holding only such assets.
Those reserves must sit with a Canadian custodian in separate accounts that creditors cannot reach if the issuer goes bankrupt. Holders could redeem any amount within three business days, with fees capped at 1%.
Issuers could not pay interest for simply holding a coin, or route it through third parties: any arrangement that lets someone earn yield from holding it, including by sharing the issuer’s income, counts as indirect payment. Rewards tied to using a coin, rather than holding it, would stay allowed.
“These prohibitions are intended to distinguish stablecoins from financial products that compete directly with bank deposits or other interest-bearing instruments,” the notice says. Issuers could still keep what their reserves earn, as long as reserves stay at least equal to the coins outstanding.
Issuers also could not present a coin as a bank deposit or claim deposit insurance or a government guarantee, and complaints would need acknowledging within seven days and resolving within 30.
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→The Stablecoin Act became law on March 26, 2026, after Ottawa announced the plan in its November budget. The Bank of Canada will register and supervise issuers.
“There is a pressing need for faster, cheaper, more transparent and more accessible cross-border payments services,” Ron Morrow, the Bank of Canada’s executive director of payments, supervision and oversight, said at an Ottawa conference in September 2025.
In the United States, President Donald Trump signed the GENIUS Act, the U.S. stablecoin law, on July 18, 2025, and also bars issuers from paying holders interest.
The fight since then has been over letting crypto platforms offer yield to users, which banks oppose because they say deposits could drain toward crypto. The dispute was divisive enough that it helped lead to the failure of the Clarity Act in the Senate, a separate piece of legislation meant to set broader rules for the crypto market.
The banking lobby opposed the Clarity Act on grounds that it did not sufficiently close what they viewed as a loophole in the GENIUS Act, which currently allows for platforms such as Coinbase to offer yield to customers who hold USDC stablecoins in their accounts.
As the stablecoin debate now proceeds to the United States’ northern neighbor, penalties would reach 1 million Canadian dollars for serious violations to 10 million for “very serious” ones, such as failing to hold adequate reserves or redeem at par value. The notice assumes five issuers, and about 30 more payment companies, including crypto platforms that hold customers’ coins in wallets, would fall under Bank of Canada oversight.
Ottawa is taking comments for 60 days, until roughly December 23. “The intention is for the proposed Regulations to come into force in fall 2027,” the notice said.
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